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This Was the Week That Movie Studios Finally Lost Control of the Industry

In a world where the theatrical release is an option, not a necessity, movie studios are no longer in charge of Hollywood.

Arnold Schwarzenegger arrives at The Big Screen is Back" media event, including ten studios convening to showcase a sampling of their summer movie releases, on Wednesday, May 19, 2021, at AMC Century City 15 in Los Angeles. (Photo by Richard Shotwell/Invision/AP)

Arnold Schwarzenegger at The Big Screen Is Back” media event

Richard Shotwell/Invision/AP

The Big Screen Is Back on May 19 was, in effect, CinemaCon concentrate: the annual four-day Las Vegas event in which studios and other distributors woo thousands of exhibitors and hundreds of press, boiled down to less than four hours in Century City to an audience of about three dozen journalists. Scale aside, it was remarkably similar to the classic CinemaCon: Thirteen distributors, touting endless trailers. Major producers and filmmakers declaring their dedication to the theatrical experience. Arnold Schwarzenegger.

Celebrating movies, and our ability to see them in public after a pandemic, is normal. What made it strange was the real world was not on display. Everyone knows that the theatrical release is an option, not a necessity.

Consider everything that’s happened in the two years since the last CinemaCon in 2019:

  • We’ve seen the launch of Disney+, Apple+, HBO Max, Paramount+, Peacock, Discovery+, and more.
  • The 90-day theatrical window, to which exhibitors once swore undying allegiance, is dead; 45 days is now accepted as the norm, more or less, and it’s understood that distributors may well change their minds.
  • Disney completed its acquisition of 20th Century Fox.
  • Disney also created a new division, the Media and Entertainment Distribution group, a centralized department that makes all distribution decisions with an eye toward satisfying Disney+ and Hulu. Theatrical distribution is a “legacy platform.”
  • Disney+ currently makes some of their films available day-and-date with premium payment and subscription; this year, HBO Max makes all of their films available to subscribers day-and-date at no additional cost.
  • MPA member Netflix bought flagship theaters in New York and Los Angeles.
  • A sex scandal removed Universal studio chief Ron Meyer; Warners’ studio head, Kevin Tsujihara, was forced to make a similar exit in March 2019.
  • This week, AT&T jettisoned Warner Media to a spinoff and merger that put Discovery in charge, while Amazon reportedly mulled a $9 billion purchase of MGM.

We have reached a point where “major movie studio” has begun to sound like an anachronism. Certainly, Warners and Universal and Paramount and Disney and Sony remain premier global suppliers of films that generate billions — but the studio bosses occupy a lower position on the power charts because it’s no longer the movie business that drives the industry.

Is that a problem? Not necessarily; things change. Projectionists used to link film reels on enormous spools for a continuous feed through giant projectors. Studios used to strike thousands of prints (hence the term P&A, or prints and ads) from the original negative (hence the term, “negative costs”) to ship celluloid 35mm prints to theaters, which would then have to return them. The late mogul Bob Evans loved giving a souvenir to his home screening room guests — an expired rod from his prized carbon arc lamp projector, long deemed too dangerous for commercial use, like the gorgeous silver nitrate prints now preserved in studio vaults.

When Silicon Valley’s Netflix sent cinephile Ted Sarandos to Hollywood, he slowly but inexorably turned the streamer into the top movie and television employer in Hollywood and around the globe. Netflix forced studios to adapt or die, resulting in a desperate game of streaming-platform catch up.

MISSION: IMPOSSIBLE - FALLOUT, Tom Cruise, 2018. Ph: Chiabella James /© Paramount /Courtesy Everett Collection

“Mission: Impossible – Fallout”

©Paramount/Courtesy Everett Collection / Everett Collection

Streamers may not have the patina of old-fashioned movie studios, but they’re dynamic; studios are not. They develop fewer projects, guided by a narrow sense of what’s sufficiently commercial to justify a theatrical release. At this point, how effectively can any movie star put butts in seats? James Bond has been played by seven actors, and after “No Time to Die,” a new one is in the offing. Tom Holland is not as popular in “Cherry” as he is as Spider-Man. Even energizer bunny Tom Cruise is more valuable as Ethan Hunt than anyone else. Immersive universes like “Star Wars” and the MCU lure audiences, platform be damned.

It was a disturbing revelation for the studios to be outmaneuvered by Netflix dollars they couldn’t match, but at least they held an ace: Only they could put filmmakers’ movies in theaters. Today, Netflix has its own theaters as well as newfound willingness from exhibitors to play their titles. Last week, Netflix debuted Zack Snyder’s “Army of the Dead” as a three-week theatrical, one-week exclusive wide release. Many have long believed that this is the paradigm distributors should follow to brand, market, and launch a title.

Warner Bros., bought and sold many times, is a small planet in the Warner Media galaxy. Cost-cutting sent billions to HBO Max, the new crown jewel, while reorganization threw out an entire tier of legacy executives in favor of newbies Ann Sarnoff and ex-Hulu exec Jason Kilar. A-list director Christopher Nolan, who could once call his own shots — including a theatrical release for “Tenet” — is looking for a new home that will support his theatrical habit. Warners’ current movie studio chairman, Toby Emmerich, does not have the stature that prior Warner chiefs Terry Semel and Alan Horn once commanded. No studio chief does.

As their corporate parents spend on streamers (except for Sony, which prefers to make money by selling to them), the studios are likely to suffer trimmed budgets. On the cutting block: cushy expense reports, travel allowances, car leases, fat salaries, vanity projects, and inflated development slates. Many deal contracts are as archaic as the old lexicon. Financiers and studios need new language and flexibility.

Slammed by global lockdowns, the biggest theater chains are also the victims of their overspending, debt burdens, real-estate deals, and mostly, denying reality. Before the pandemic, they could have struck better terms with the studios on shorter windows and revenue sharing. They held out too long.

“The Woman in the Window,” which Disney inherited in its Fox acquisition, is an example of a starry project that — however disappointing — would ordinarily have played in theaters. Just like blockbusters, genre pics, and prestige releases, dumping had its place in the exhibition ecosystem; today, studios sell off weak performers to Netflix, Amazon, and Apple. Only the most powerful stars and the Spielbergs of the world will be able to command a guaranteed theatrical release.

Companies adjust. Disney’s specialty distributor Searchlight, under its new management team David Greenbaum and Matthew Greenfield, plans to release six films a year to theaters from directors like Wes Anderson and Guillermo del Toro; it will also produce and acquire for Hulu and Star and is now in preproduction on its first limited series, “The Dropout,” for Hulu and 20th TV.

Jason Blum arrives at The Big Screen is Back" media event, including ten studios convening to showcase a sampling of their summer movie releases, on Wednesday, May 19, 2021, at AMC Century City 15 in Los Angeles. (Photo by Richard Shotwell/Invision/AP)

Jason Blum arrives at The Big Screen Is Back”

Richard Shotwell/Invision/AP

Even venerable Sony Pictures Classics learned a few things during lockdown about how to make money on PVOD — although their big Oscar wins for “The Father” came after a late theatrical release with maximum impact during the Academy voting window. Michael Barker and Tom Bernard recognize that theaters are a unique asset in building word of mouth. If the studios ignore or diminish that value, they will regret it.

There was a moment at The Big Screen is Back where the present snapped into focus. “We’re at an inflection point in our world,” said Blumhouse founder Jason Blum. “It feels like our industry is, too. The collision of recovery from the pandemic and shifting business models and crazy corporate consolidation of the past week puts us at the intersection of recovery and also of change. … With change comes opportunity. Every studio is experimenting with different windows and bespoke business models. Movie theaters is where we want to see our work.”

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